What is Automated Demand Response? Well, demand response is the process whereby electricity consumers (typically commercial) reduce their usage in response to a signal from the utility that they are in a period of peak demand. The signal often takes the form of a phone call.

Automated demand response, as you would imagine, is when this procedure is automated using software signals (often signals of price fluctuation). The development of ADR technologies received a big boost with the development of the OpenADR standard, and the subsequent formation in 2010 of the OpenADR Alliance to promote its use.

provide a common way for devices and appliances on the electric grid to respond automatically to changes in price, weather, and demand for power, a process called automated demand response (ADR).

ADR makes it possible to translate changes in wholesale markets to corresponding changes in retail rates. It helps system operators reduce the operating costs of demand response (DR) programs while increasing its resource reliability. For customers, ADR can reduce the cost of electricity by eliminating the resources and effort required to achieve successful results from DR programs.

The EPRI ADR software was certified by the OpenADR Alliance. “Making this software freely available to the industry will accelerate the adoption of standards-based demand response” said Mark McGranaghan, vice president of Power Delivery and Utilization at EPRI.

This software has the potential to finally bring the smart grid into the home, allowing smart appliances to adjust their behaviour depending on the state of the grid. Some manufacturers have been fudging this functionality already with a combination of internet connected devices and cloud computing resources (see Whirlpool 6th Sense device above). And others, like GE are planning to bring older appliances into the connected fold, by sending out wifi modules that add new sensor capabilities.

Connecting appliances to the grid has the ability to make them far smarter. We’ll be discussing this, and more IoT topics in far more detail at ThingMonk, our upcoming Internet of Things event, in Denver next month. Hope to see you there.

Electric utility companies have to supply electricity to a user base whose demand is variable but reasonably predictable. On particularly hot or cold days, demand will increase as people turn on air conditioning or central heating units. This causes a peak in demand which may only occur for a few hours per year but still has to be met by these utilities.

How do utilities deal with these peaks in demand? There are two ways generally. The first is to build peaking plants. These are generation facilities built specifically to handle peaks in power demand. This is the traditional way of handling surges in electricity consumption but it is expensive to build a power plant, especially one that will only potentially be used a couple of days a year.

The other way is to try to manage the demand for electricity so it doesn’t reach as high a peak – known as peak shaving, or more typically, demand response.

One company which supplies demand response solutions to utilities is Comverge. I spoke to Comverge’s VP of Marketing, Jason Cigarran recently, about their newest demand response product, SmartPrice.

Comverge have been working on demand response solutions with utilities for a number of years now and they have just published case studies with two of their customers Tampa Electric [PDF] and Gulf Power [PDF].

What is interesting about these case studies is that the utilities customers report increased satisfaction with their utilities, as well as lower power bills. And the utilities get more predictable demand response, as well as happier customers. Classic win-win.

How does it work so well? Well the Comverge demand response offering is an automated system. Utility customers access it through a web portal and set how their devices should respond to demand response events. Typically they might set their pool pump to turn off, or their aircon to increase its temperature a degree or two.

The utility companies in turn see how much demand their customers have signed up to shed and because it is an automated load shedding, they know how much demand will reduce. This is unlike more manual demand response systems where the utilities are hoping their customers will turn down their appliances.

Demand response is a solution I have mentioned many times on this blog, and it was always my contention that an automated system, where devices listen to pricing signals from utilities, and respond accordingly, was the only way demand response would work well. It is great to see Comverge making that a reality.

However, by shifting cleaning services to daytime, you are also shifting the energy utilisation of the cleaning staff to the time of peak demand. At this time the electricity generation mix is at its dirtiest with all the fossil fuel generators in the mix. Adding demand during peak load is not a good thing.

During the evening/night however, energy demand falls and consequently at this time there is a higher percentage of renewables in the mix. As a result electricity consumed during off peak hours has a lower environmental impact.

It would depend from area to area and on the energy provider involved but shifting to daytime cleaning is not necessarily an environmentally sound practise and may, in fact do more harm than good.

The output from smart meters is incredibly granular. Far more so than is obvious from the smart meter output graph above.

In conversations with Dr Monica Sturm (Director of Siemen’s Center of Competence, Metering Services) last November (2008) she confirmed to me that it is possible to identify individual devices in someone’s home down to make, model and year of manufacture by looking at their energy profile – the output of their smart meter.

This kind of information is absolute gold and don’t think the utility companies aren’t starting to wake up to the fact. They are, and they are not alone. Why else do you think Google have jumped into this space with their PowerMeter offering. Not to be outdone, Microsoft have also stepped in with their Hohm product.

It won’t be long before Apple joins the fray with a sleekier, sexier iHome application!

For the utilities themselves, there are data protection issues to be worked through but once they are (and they will be), the utilities will use this data to help make up for the earnings lost as customers become more energy efficient (consuming less expensive energy).

One revenue model you will start to see emerge is utility companies selling appliances (and possibly even cars!). How will it work?

Because the utility company will have full visibility of our energy consumption, they will see when your devices are inefficient/faulty. I can very easily envisage receiving a communication from my utility company in the not-too-distant future along the lines of:

Dear Mr Raftery (actually, as I am based in Spain it would be more likely to be Estimado Sr. Raftery but let’s stick with the English version),

We notice from your energy profile that you own a 2004 Indesit BAN12NFS fridge freezer. Our records show that in the last 3 months the compressor in that freezer has become much less efficient and it is now costing you €25 a month just to run that one appliance.

We have partnerships with service companies who could try to repair the compressor in that fridge freezer for you, or alternatively, we have a special offer this month on new energy efficient fridge freezers.

We can have a brand new fridge freezer installed in your home before the end of the week. We can take away your old one for responsible disposition. And all this will won’t cost you a penny, in fact it will save you €10* per month off your current bill!

So, to summerize, if you call our hotline now on 555-123 4567 you can save €10 off your monthly bill, have a brand new fridge-freezer installed free and reduce your CO2 emissions by 12kg a year.

What are you waiting for?

*We charge you €15 per month for the new fridge thus saving you €10 per month off your current bill. Terms and conditions apply.

That’s just one possible scenario of how the utility companies will make use of smart meter data to generate alternative revenue streams for themselves – can you think of others?

I was invited by James McClelland and Maureen Coveney to participate in a panel at SAP’s Sapphire conference earlier this year discussing Smart Grids.

One of the key points I made was that utilities are not used to having to deal with customers. The only real interactions utilities have with customers are 1) sending out bills and 2) when the power goes and customers ring up to complain. It is highly unusual to have a utility company poll its customers when rolling out a new product, for example (for that matter, when was the last time your utility rolled out a new product?).

With the requirement to roll-out smart grids and the increasing empowerment of customers using web 2.0 technologies, for example, utilities are now going to have to learn to listen to their customers very quickly. Any roll-out of demand response programs which doesn’t take customer concerns into account is almost certain to run into serious difficulties. I have heard several utilities talk about using smart grids to come into customers houses and turn down their air conditioning at times of peak demand. Wrong! This kind of message will not sell easily.

A recent example of a not-so-smart grid was highlighted by 3News in New Zealand recently when they reported that the smart grids being rolled out there were ones where:

the benefits from smart meters almost entirely accrue to the retailer… Consumers will end up paying for meters that provide them with minimal benefits

Utilities are going to have to radically change how they deal with their customers, and quickly or they risk having spectacular failures when they launch their smart grid initiatives!

With Google’s announcement of their PowerMeter, home energy management solutions are really going mainstream.

With that in mind, I wanted to have a chat with Jonathan Gay, the founder and CTO of Greenbox (not CEO as I said in the intro – d’oh!). Greenbox have been one of the pioneering companies in this space and they sell their energy management solution to utilities for rollout to the utilities’ customers.

Smart home energy management solutions are going to pivotal to the rollout of successful demand response programs – if my home energy management solution can interface with my appliances and have them respond to dynamic energy pricing information according to rules I set, then demand response will play a significant part in reducing our energy footprint.

I have made no secret of the fact that I am a big fan of Smart Grids and Demand Response programs (properly rolled out, of course!). I have also spoken at various international conferences propounding the benefits of Smart Grids and Demand Response for quite a while now.

You can imagine my disappointment then when I read an article entitled Outsmarting the Smart Grid which was strongly anti-Smart Grids, on The EnergyCollective site by William Tucker, a pro-nuclear writer.

William sets a facetious tone for the article in his opening paragraph:

The latest delusion about energy is the “smart grid.” This bright new technological miracle will once again help us overcome the realities of physics and allow us to live in a world run on wind and sunshine.

The genesis for Mr Tucker’s displeasure appears to be the above GE ad informing people of the benefits of Smart Grids.

He says

It’s fitting that the girl is standing in front of a clothes dryer because that and washing dishes are the only examples anyone has ever been able to come up with about how residential users are going to “redistribute” their energy consumption.

What else can they do? Are they going to wait until after midnight to watch prime-time television? Are they going to heat up dinner at 4 a.m.? Are they going to turn on lights at sunrise instead of sunset? And how about air conditioning, that most voracious consumer of electricity?

Again with the unhelpful sarcasm.

While it is true that not all loads in the home are movable – I use the example that I am highly unlikely to get up at 3am to cook my dinner just because energy is cheaper – there are more than just the dish washer and the dryer. Mr Tucker neglects to mention here air conditioning (though he does mention it elsewhere in his post so he is aware of it). Nor does he mention heating water in an immersion, refrigeration, PHEVs or storage heaters for example – all very movable residential loads. Of course, he neglects to mention industrial scale demand response altogether!

Mr Tucker then re-defines the Smart Grid to suit his argument

the underlying presumption of the smart grid is that it will somehow help us conserve significant amounts of energy

Uh, no it isn’t. The presumption of the Smart Grid is that it will more closely align demand with supply, thereby stabilising the grid and facilitating the further penetration of renewables onto it, thereby lowering our carbon footprint. The Smart 2020 report (7mb pdf) estimates that Smart Grids will reduce CO2 by 2.03 GtCO2e by 2020.

Mr Tucker seems hell-bent though on criticising Smart Grids for not reducing consumption quoting from the Electric Power Research Institute (EPRI) “The Green Grid,” study published last June

its most optimistic prediction was that by 2030 we could reduce electrical consumption by 7 to 11 percent below what is now being projected. That’s not an absolute reduction in consumption but only a slowing of its anticipated rise. Second, as the study concludes, “shift[ing] load from on-peak to off-peak periods may not necessarily save energy.” It will only save money. And when you make electricity cheaper, people may consumer more of it.

What Mr Tucker is again conveniently forgetting is that electrical consumption is not the problem, per se. The problem occurs when that energy is generated using coal, oil or some other non-renewable form.

In fact, there are times when we have too much electricity and you are increasingly seeing wind farms curtailed as a result of this phenomenon. Instead of curtailing wind energy when we have an excess, what we should be doing is demand stimulation – stimulating people to increase their demand at this time of excess supply. This can be achieved by dropping the price of electricity to 0 or even making it negatively priced and making that information available via Demand Response programs rolled out over Smart Grids.

Mr Tucker concludes by once more poking fun at the GE ad

In that light, it’s worth going back to that last little GE vignette where the girl says, “It’s sunny in Arizona.” She is standing at a window looking at a waxing half moon about three hours above the horizon. If she’s in the Midwest, that means the sun has already set in Arizona. If she’s on the East Coast, then it’s about to go down. She’d better get to bed because in another twenty minutes the lights, refrigerator, television, computers and everything else are going to turn off.

Meeting pointless pedantry with more pointless pedantry, the girl is looking at a street light, not a waxing moon.

Mr Tucker’s main argument is that Smart Grids won’t necessarily reduce consumption so we shouldn’t bother with them.

Energy is very abstract, no-one really cares how much they use. What they do care about is the utility bill at the end of the month and increasingly, the carbon footprint of that consumption. If I consume 10 TeraWatt hours in my home daily (not possibly obviously!), as long as it has a negligible carbon footprint, so what?

What Smart Grids and intelligent Demand Response programs will do is, massage the demand for electricity so that it lines up with the supply. This stabilises the grid for the ISO (the grid operator) allowing them to add even more variable generation sources (i.e. renewables) to the system lowering costs and carbon footprints. Win, win.

The discussion continues in the comments where Mr Tucker rails against Demand Response

Now that I think about it, here’s what’s going to happen if the utility can cut off 1/6th of its air conditioning load on a rotating basis. If people know this – which they will – they’re just going to run their air conditioning a little higher while it’s on in order to compensate for the 1/6th of the time it’s off. It’s like the low-flush toilets that you have to flush twice to do the job.

However, for once he has a valid point!

This is why when you roll out Demand Response programs, you put the control directly in the hands of the consumer. The top-down, command and control utility attitude of “we’ll turn off your aircon when it suits us” will only turn people against Demand Response.

Instead, you roll out home area networks and home energy portals where people decide themselves how they want their devices to respond to pricing signals. You’d be able to program your dishwasher to wash the dishes when electricity at 6c/KWh or 6am, which ever came sooner, for example. If you put the washer on at 8pm, for the most part, as long as the dishes are washed by 7am the following morning, you don’t care when it happens.

Similarly with your immersion, if it selectively heats the water when electricity drops below either a set price or a set temperature, as long as you have enough hot water, you are happy.

Obviously any home energy portal like this would allow the home owner full control over all the devices in the house because they belong to the home owner, not the utility!

Long term, what I want to see happen is, I want utilities to publish their generation mix (% coal, % natural gas, % oil, % hydro, % chg, % wind, etc.), as well their prices, in realtime. That way I should be able not only to control my devices but also have the ability to select the Greenest utility supplier dynamically at any time – now that’s a Smart Grid well worth having.

The talk will be about how to make the electrical distribution system more green and more resilient using demand response and smart grids in a consumer empowering way. I will also discuss my vision for an electricity system where you will be able to see the generation mix of all utilities and dynamically chose the Greenest supplier and other out there concepts!

In the video above, you can watch a primer to this talk I gave in a webinar for O’Reilly last night.

An article in the UK’s Sunday Times recently talked about the plans for a nationwide rollout of Smart Meters in Britain.

From the article:

Telecoms giants Vodafone, O2 and BT and system integrators Logica, Accenture, IBM and Capgemini are understood to have started talks to form bidding consortiums…

The government has put smart meters at the heart of its energy policy but progress on its implemen-tation has been slow. A consensus has emerged recently between the Department for Energy and Climate Change, Ofgem, the regulator, and the big six utility companies over how it will be done.

Each utility will be responsible for fitting new meters for its customers, starting a roll-out from 2010…

To ensure transparency, a “central communications” group would be set up to electronically collect, process and distribute data and serve as the go-between for energy companies and the meters in their customers’ homes…

Ofgem is expected to run the tender for the contract, which would operate from 2010 to 2020. The winning group would likely consist of a telecoms provider and a systems integrator. There is an outside chance that the contract could be broken down regionally.

This is great news for Britain as it will allow for demand response projects to be rolled out with the consequent nationwide energy savings and the possibilities to increase the penetration of renewables on the grid. Ireland continues to drag its feet in this area with a limited pilot to begin next year. With the irish government hoping to reach 40% penetration of renewables by 2020, they really need to pick up the pace if they want to come anywhere near achieving that target.